Oil Services Stock - Mammoth Energy Services

I took a small position this week in one of the hottest sectors.

The oil services and equipment sector has been one of the hottest areas of the market for quite some time, even so it is still only a fraction of what it was few years ago.

If you believe oil prices are headed higher and that eventually the government will need to be more friendly to domestic oil exploration and drilling, then this area of the market presents alot of opportunity IMO.

Oil has many tailwinds behind it in the coming years. A few of these include the lack of CapEx over the last decade which is going to take years to fix, heightened geopolitical risk, Opec’s lack of spare capacity, increased demand globally, china re-opening the list really goes on and on for the bull case.

Mammoth Energy Services Monthly Chart

The Monthly timeframe really puts things into perspective of where these oil service stocks once were and the potential for some of them. I am not saying this particular stock is going back to $45 but there is definitely potential runway here.

Mammoth Energy Services Weekly Chart

The stock initially broke out this summer around $2.50 cents and went on a nice run for those that took a position. It then consolidated for quite some time and finally broke out again last week as volume continues to increase in the stock. It’s worth noting that once it gets past $7.30 on a weekly close it doesn’t have much of any resistance left.

The company’s revenue in Q1 was 62 million and has grown in Q3 to 107 million dollars. Thats huge growth over the course of a few months. The company expects revenue to continue to grow and for business to continue to expand in Q4.

The companies infrastructure division did a bunch of rebuilding in Puerto Rico after Hurricane Maria and is still owed over $300 million dollars for that work. It is being fought in court right now and could be a potential bonus for the company. Thats not why I bought the stock but is worth noting.

The company currently has 4 operational pumping fleets and expects to have the 5th one activated this quarter, this should add even more revenue upside. They expect a 6th to be going in the first half of 2023.

I believe this is an area of the market where alot of capital is likely to flow over the next year or two and I like the asymmetric opportunity. Make sure to do your own due diligence and look into the company as there is alot more information on their website. Also worth listening to is the Q3 earnings phonecall in which the management gives alot of insight into what’s to come for the company.

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